csp_53109nq.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number (811-07444)

American Strategic Income Portfolio Inc. III

(Exact name of registrant as specified in charter)

800 Nicollet Mall

Minneapolis, MN 55402

(Address of principal executive offices) (Zip code)

Charles D. Gariboldi, Jr.

800 Nicollet Mall Minneapolis, MN 55402

(Name and address of agent for service)

800-677-3863

Registrant's telephone number, including area code

Date of fiscal year end: 08/31/09

Date of reporting period: 05/31/09

Item 1. Schedule of Investments.

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

May 31, 2009

DESCRIPTION			DATE ACQUIRED		PAR		COST		VALUE ¶

(Percentages of each investment category relate to total net assets)
Whole Loans ∞ & — 96.4%
	Commercial Loans — 57.4%
		150 North Pantano I, Tucson, AZ, 5.90%, 2/1/10 β ¶ r	1/4/05	$	3,525,000	$	3,525,000	$	3,525,000
		150 North Pantano II, Tucson, AZ, 14.88%, 2/1/10 ¶	1/4/05		440,000		440,000		421,248
		8324 East Hartford Drive I, Scottsdale, AZ, 5.15%, 5/1/09 β ♣	4/8/04		3,696,361		3,696,361		3,696,361
		Academy Spectrum, Colorado Springs, CO, 7.73%, 5/1/09 ♣ u	12/18/02		4,959,112		4,959,112		3,471,378
		Alliant University, Fresno, CA, 7.15%, 8/1/11 β	7/12/06		2,781,611		2,781,611		2,827,668
		Apple Blossom Convenience Center, Winchester, VA, 6.58%, 8/1/12 ¶	7/9/07		2,150,000		2,150,000		2,126,711
		Biltmore Lakes Corporate Center, Phoenix, AZ, 6.00%, 9/1/09 β	8/2/04		3,209,880		3,209,880		3,209,880
		Carrier 360 I, Grand Prairie, TX, 5.40%, 7/1/09 β	6/28/04		3,153,467		3,153,467		3,153,467
		Carrier 360 II, Grand Prairie, TX, 5.88%, 7/1/09	12/16/05		328,697		328,697		328,697
		Fairview Business Park, Salem, OR, 7.33%, 8/1/11 β	7/14/06		7,590,028		7,590,028		7,558,620
		First Colony Marketplace, Sugar Land, TX, 6.43%, 9/1/10 β ¶	8/15/07		11,700,000		11,700,000		11,548,580
		France Avenue Business Park II, Brooklyn Center, MN, 7.40%, 10/1/12 β	9/12/02		4,293,704		4,293,704		4,348,908
		France Avenue Business Park II (second), Brooklyn Center, MN, 7.38%, 10/1/12 ¶	1/17/08		600,000		600,000		606,732
		Jilly’s American Grill, Scottsdale, AZ, 4.37%, 9/1/09 β ¶ r	8/19/05		1,810,000		1,810,000		1,781,739
		La Cholla Plaza I, Tucson, AZ, 3.67%, 8/1/09 β ¶ r	7/26/06		11,135,604		11,135,604		10,896,456
		La Cholla Plaza II, Tucson, AZ, 14.88%, 8/1/09 ¶ ≠	7/26/06		1,389,396		1,389,396		1,177,726
		Memphis Medical Building, Memphis, TN, 6.40%, 9/1/12 ¶	8/22/07		4,250,000		4,250,000		4,160,683
		NCH Commercial Pool I, Tucson, AZ, 11.93%, 4/1/10 ¶	3/27/07		5,500,000		5,500,000		5,171,458
		NCH Commercial Pool II, Phoenix, AZ, 11.93%, 1/1/11 ¶ ≠	12/4/07		14,000,000		14,000,000		13,665,865
		Noah’s Ark Self Storage, San Antonio, TX, 6.48%, 9/1/10 β ¶	8/24/07		2,400,000		2,400,000		2,391,351
		North Austin Business Center, Austin, TX, 5.65%, 11/1/11 β	10/29/04		3,829,038		3,829,038		3,762,522
		Outlets at Casa Grande I, Casa Grande, AZ, 6.93%, 3/1/11 β ¶	2/27/06		7,300,000		7,300,000		7,389,339
		Outlets at Casa Grande II, Casa Grande, AZ, 6.90%, 3/1/11 β ¶	4/11/07		3,500,000		3,500,000		3,544,726
		Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17 β ¶	3/26/07		4,600,000		4,600,000		4,161,773
		RealtiCorp Fund III, Orlando/Crystal River, FL, 6.42%, 7/1/09 ¶ r	2/28/06		4,222,755		4,222,755		4,222,755
		Shoppes at Jonathan’s Landing, Jupiter, FL, 7.95%, 5/1/10 β	4/12/00		2,685,528		2,685,528		2,739,239
		Silver Star Storage, Austin, TX, 6.40%, 4/1/11 ¶	3/25/08		4,156,239		4,156,239		4,105,162
		Spa Atlantis, Pompano Beach, FL, 6.93%, 4/1/09 ¶ ♣ u	9/30/05		19,281,600		19,281,600		10,999,998
		Tatum Ranch Center, Phoenix, AZ, 6.53%, 9/1/11 β	8/25/04		3,472,402		3,472,402		3,454,955
							141,960,422		130,448,997

	Multifamily Loans — 39.0%
		Avalon Hills I, Omaha, NE, 6.93%, 3/1/10 β ¶	3/1/07		10,720,000		10,720,000		10,827,200
		Avalon Hills II, Omaha, NE, 9.88%, 3/1/10 ¶ ♠ Σ	3/1/07		2,448,800		2,448,800		1,846,921
		Chateau Club Apartments I, Athens, GA, 6.68%, 12/1/10 ¶	12/20/07		6,623,000		6,623,000		4,841,335
		Chateau Club Apartments II, Athens, GA, 6.88%, 12/1/10 ¶ ♠ Σ	12/20/07		2,368,624		2,368,624		1,658,037
		Citadel Apartments I, El Paso, TX, 6.53%, 4/1/10 β ¶	3/30/07		10,290,868		10,290,868		10,290,868
		Citadel Apartments II, El Paso, TX, 9.88%, 4/1/10 ¶	3/30/07		499,779		499,779		465,422
		Country Villa Apartments, West Lafayette, IN, 6.90%, 9/1/13 β	8/29/03		2,440,305		2,440,305		2,263,772
		Courtyards at Mesquite I, Mesquite, TX, 6.53%, 11/1/09 β	10/14/05		7,411,491		7,411,491		7,411,491
		Courtyards at Mesquite II, Mesquite, TX, 7.90%, 11/1/09 ¶ ♠ Σ	10/14/05		2,850,000		2,850,000		2,100,980
		El Dorado Apartments I, Tucson, AZ, 7.15%, 9/1/12 β	8/26/04		2,510,388		2,510,388		2,535,018
		El Dorado Apartments II, Tucson, AZ, 7.13%, 9/1/12	8/26/04		492,589		492,589		494,542
		Geneva Village Apartments I, West Jordan, UT, 7.00%, 1/1/14 β	12/24/03		1,183,784		1,183,784		1,177,697
		Geneva Village Apartments II, West Jordan, UT, 9.88%, 1/1/13	12/24/03		39,363		39,363		37,899
		Good Haven Apartments I, Dallas, TX, 5.43%, 9/1/07 ¶ r ♣ u	8/24/04		6,737,000		6,737,000		4,715,900
		Good Haven Apartments II, Dallas, TX, 14.88%, 9/1/07 ¶ ♣ u	8/24/04		842,000		842,000		589,400
		Good Haven Apartments III, Dallas, TX, 14.88%, 5/1/09 ¶ ♣ u	7/3/08		694,096		694,096		485,867
		Meadowview Village Apartments I, West Jordan, UT, 7.00%, 1/1/14	12/24/03		859,198		859,198		854,780
		Meadowview Village Apartments II, West Jordan, UT, 9.88%, 1/1/13	12/24/03		39,363		39,363		37,899
		Meridian Pointe Apartments, Kalispell, MT, 8.73%, 4/1/12 β	3/7/97		1,025,585		1,025,585		1,056,353
		Montevista Apartments, Fort Worth, TX, 7.43%, 9/1/12 ¶ ♠	8/30/07		7,308,000		7,308,000		5,507,936
		NCH Multifamily Pool, Oklahoma City, OK, 11.93%, 11/1/09 ¶ u	10/17/06		4,993,450		4,993,450		4,629,419
		Parkway Village Apartments I, West Jordan, UT, 7.00%, 1/1/14	12/24/03		813,809		813,809		810,057

FIRST AMERICAN MORTGAGE FUNDS 2009 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

May 31, 2009

DESCRIPTION					DATE ACQUIRED		PAR/ SHARES			COST		VALUE ¶

		Parkway Village Apartments II, West Jordan, UT, 9.88%, 1/1/13			12/24/03	$		39,363	$	39,363	$	37,899
		Plantation Pines I, Tyler, TX, 6.59%, 2/1/10 β ¶			1/17/07			3,328,000		3,328,000		3,347,989
		Plantation Pines II, Tyler, TX, 10.57%, 2/1/10 ¶			1/17/07			416,000		416,000		345,029
		RiverPark Land Lot III, Oxnard, CA, 3.90%, 11/1/09 ¶ r			10/9/07			3,650,000		3,650,000		3,583,261
		Villas of Woodgate, Lansing, MI, 6.40%, 2/1/12 β			2/1/07			3,561,304		3,561,304		3,450,260
		Vista Village Apartments I, El Paso, TX, 6.53%, 4/1/10 β ¶			3/30/07			6,094,592		6,094,592		6,094,592
		Vista Village Apartments II, El Paso, TX, 9.88%, 4/1/10 ¶			3/30/07			349,845		349,845		327,370
		Whispering Oaks I, Little Rock, AR, 5.93%, 2/1/12 β ¶			1/10/07			5,800,000		5,800,000		4,977,429
		Whispering Oaks II, Little Rock, AR, 9.88%, 2/1/12 ¶ ♠ Σ			1/10/07			2,636,000		2,636,000		1,845,200
										99,066,596		88,647,822
			Total Whole Loans							241,027,018		219,096,819

Corporate Notes ∞ ¶ — 11.2%
	Fixed Rate — 11.2%
		Sarofim Brookhaven, 6.90%, 1/1/11			12/21/07			10,040,375		10,040,375		10,241,183
		Stratus Properties IV, 6.56%, 12/31/11			12/1/06			7,000,000		7,000,000		7,140,000
		Stratus Properties VI, 6.92%, 12/31/11			6/1/07			8,000,000		8,000,000		8,160,000
				Total Corporate Notes						25,040,375		25,541,183

Private Mortgage-Backed Security ∞ — 0.0%
	Fixed Rate — 0.0%
		First Gibraltar, Series 1992-MM, Class B, 6.06%, 10/25/21			7/30/93			93,038		57,728		—

U.S. Government Agency Mortgage-Backed Securities ■ — 5.0%
	Fixed Rate — 5.0%
		Federal Home Loan Mortgage Corporation,
				5.50%, 1/1/18, #E93231				2,361,591		2,412,538		2,481,783
				9.00%, 7/1/30, #C40149				173,478		177,368		184,456
				5.00%, 5/1/39, #G05430				5,678,760		5,832,510		5,813,039
		Federal National Mortgage Association,
				6.00%, 10/1/16, #607030				181,326		181,982		192,424
				5.50%, 2/1/17, #623874				319,909		319,392		336,391
				5.50%, 6/1/17, #648508				204,980		205,683		215,412
				5.00%, 9/1/17, #254486				357,372		358,029		372,830
				5.00%, 11/1/17, #657356				740,496		743,220		772,526
				6.50%, 6/1/29, #252497				618,895		615,388		668,677
				7.50%, 5/1/30, #535289				100,767		97,910		111,013
				8.00%, 5/1/30, #538266				40,847		40,411		45,195
				8.00%, 6/1/30, #253347				108,814		107,651		120,398
				Total U.S. Government Agency Mortgage-Backed Securities						11,092,082		11,314,144

Commerical Mortgage-Backed Security r — 0.8%
	Other — 0.8%
		LB-UBS Commercial Mortgage Trust, Series 2008-C1, Class A2, 6.15%, 4/15/41						2,250,000		1,510,198		1,878,263

Preferred Stocks — 14.8%
	Real Estate Investment Trusts — 14.8%
		AMB Property, Series L						164,120		3,789,361		2,543,860
		AMB Property, Series M						41,240		950,889		669,738
		AMB Property, Series O						9,613		240,325		175,437
		AMB Property, Series P						21,200		429,300		342,380
		BRE Properties, Series C						66,300		1,317,381		1,177,488
		BRE Properties, Series D						5,250		104,318		92,662
		Developers Diversified Realty, Series G						57,600		997,080		587,520

FIRST AMERICAN MORTGAGE FUNDS 2009 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

May 31, 2009

DESCRIPTION		SHARES		COST		VALUE ¶

	Developers Diversified Realty, Series H	69,320	$	1,234,880	$	653,688
	Developers Diversified Realty, Series I	4,270		89,030		39,327
	Duke Realty, Series J	20,956		535,385		277,877
	Duke Realty, Series L	19,220		367,486		257,548
	Duke Realty, Series M	55,040		1,110,800		790,374
	Duke Realty, Series O	44,550		1,051,380		751,113
	Equity Residential Properties, Series N	10,700		226,305		215,070
	Kimco Realty, Series F	163,000		3,797,000		2,815,010
	Kimco Realty, Series G	114,700		2,796,559		2,224,033
	ProLogis Trust, Series F	33,905		835,567		525,527
	ProLogis Trust, Series G	8,300		174,300		128,650
	PS Business Parks, Series H	26,520		530,400		491,946
	PS Business Parks, Series I	94,300		1,634,731		1,683,255
	PS Business Parks, Series K	25,000		575,000		524,000
	PS Business Parks, Series L	7,000		179,550		133,980
	PS Business Parks, Series M	26,520		546,312		494,598
	PS Business Parks, Series O	100,000		2,050,000		1,901,000
	PS Business Parks, Series P	8,200		157,194		145,304
	Public Storage, Series A	38,000		921,909		814,340
	Public Storage, Series C	30,000		626,100		617,700
	Public Storage, Series E	9,300		186,000		193,068
	Public Storage, Series H	40,000		876,000		851,200
	Public Storage, Series I	26,520		576,810		605,982
	Public Storage, Series K	17,550		381,712		399,964
	Public Storage, Series L	20,000		430,000		419,400
	Public Storage, Series X	74,000		1,786,319		1,454,840
	Public Storage, Series Z	30,000		746,643		576,000
	Realty Income, Series D	97,500		2,474,125		2,096,250
	Realty Income, Series E	26,520		572,832		511,836
	Regency Centers, Series C	26,520		573,362		510,510
	Regency Centers, Series E	94,270		2,221,248		1,708,644
	Vornado Realty Trust, Series E	7,400		186,598		137,122
	Vornado Realty Trust, Series F	7,800		164,970		138,840
	Vornado Realty Trust, Series H	163,000		2,771,000		2,934,000

Total Preferred Stocks				41,216,161		33,611,081

Total Unaffiliated Investments				319,943,562		291,441,490

Short-Term Investment — 3.6%
	First American Prime Obligations Fund, Class Z Ø	8,160,216		8,160,216		8,160,216

	Total Investments p — 131.8%		$	328,103,778	$	299,601,706

	Other Assets and Liabilities, Net — (31.8)%					(72,246,547	)

	Total Net Assets — 100.0%				$	227,355,159



¶	The fund’s investments in whole loans (single family, multifamily, and commercial) are generally not traded in any organized market and therefore, market quotations are not readily available. These investments are valued at fair value according to procedures adopted by the fund’s board of directors. Pursuant to these procedures, these investments are initially fair valued at cost as this approximates fair value and adjusted using a FAF Advisors pricing model designed to incorporate, among other things, the present value of the projected stream of cash flows on such investments. The pricing model takes into account a number of relevant factors including the projected rate of prepayments, the delinquency profile, the historical payment record, the expected yield at purchase, changes in prevailing interest rates, and changes in the real or perceived liquidity of whole loans as the case may be. The results of the pricing model may be further subject to price ceilings due to the illiquid nature of the loans. Changes in prevailing interest rates, real or perceived liquidity, yield spreads, and creditworthiness are factored into the pricing model each week.

FIRST AMERICAN MORTGAGE FUNDS 2009 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

May 31, 2009

Certain mortgage loan information is received once a month. This information includes, but is not limited to, the projected rate of prepayments, projected rate and severity of defaults, the delinquency profile, and the historical payment record. Valuations of whole loans are determined no less frequently than weekly. Although FAF Advisors believes the pricing model to be reasonable and appropriate, the actual values that may be realized upon the sale of whole loans can only be determined in negotiations between the fund and third parties.

Security valuations for the fund’s investments (other than whole loans) are generally furnished by an independent pricing service that has been approved by the fund’s board of directors. Investments in equity securities that are traded on a national securities exchange (or reported on the Nasdaq national market system) are stated at the last quoted sales price if readily available for such securities on each business day. For securities traded on the Nasdaq national market system, the fund utilizes the Nasdaq Official Closing Price which compares the last trade to the bid/ask price of a security. If the last trade falls within the bid/ask range, then that price will be the closing price. If the last trade is outside the bid/ask range, and falls above the ask, the ask price will be the closing price. If the last trade is below the bid, the bid will be the closing price. Other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Investments in open-end funds are valued at their respective net asset values on the valuation date.

Debt obligations exceeding 60 days to maturity are valued by an independent pricing service. The pricing service may employ methodologies that utilize actual market transactions, broker-dealer supplied valuations, or other formula-driven valuation techniques. These techniques generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings, and general market conditions. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from a widely-used quotation system. Debt obligations with 60 days or less remaining until maturity may be valued at their amortized cost which approximates market value.

The following investment vehicles, when held by the fund, are priced as follows: Exchange listed futures and options on futures are priced at their last sale price on the exchange on which they are principally traded, as determined by FAF Advisors, Inc. (“FAF Advisors”), on the day the valuation is made. If there were no sales on that day, futures and options on futures will be valued at the last reported bid price. Options on securities, indices, and currencies traded on Nasdaq or listed on a stock exchange, whether domestic or foreign, are valued at the last sale price on Nasdaq or on any exchange on the day the valuation is made. If there were no sales on that day, the options will be valued at the last sale price on the previous valuation date. Last sale prices are obtained from an independent pricing service. Forward contracts (other than currency forward contracts), swaps, and over-the-counter options on securities, indices, and currencies are valued at the quotations received from an independent pricing service, if available.

When market quotations are not readily available, securities are valued at fair value as determined in good faith by procedures established and approved by the fund’s board of directors. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on disposition; trading in similar securities of the same issuer or comparable companies; information from broker-dealers; and an evaluation of the forces that influence the market in which the securities are purchased or sold. If events occur that materially affect the value of securities (including non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities will be valued at fair value.

As of May 31, 2009, the fund held fair valued securities with a value of $244,638,002 or 107.6% of total net assets.

∞

Securities purchased as part of a private placement which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. See ¶ footnote above.

Interest rates on commercial and multifamily loans are the net coupon rates in effect (after reducing the coupon rate by any mortgage servicing fees paid to mortgage servicers) on May 31, 2009. For participating loans the rates are based on the annual cash flow payments expected at the time of purchase.

Securities pledged as collateral for outstanding borrowings under a loan agreement with Massachusetts Mutual Life Insurance Company (“MMLIC”). On May 31, 2009, securities valued at $133,423,253 were pledged as collateral for the following outstanding borrowings:

Accrued

Amount

Rate*

Interest

$54,400,000

5.00%

$226,667

10,300,000

5.00%

42,917

$64,700,000

$269,584

* Interest rate as of May 31, 2009. Rate is based on the LIBOR plus 2.625% subject to a “floor” interest rate of 5.00% and reset monthly.

Description of collateral:

150 North Pantano I, Tucson, AZ, 5.90%, 2/1/10, $3,525,000 par

8324 East Hartford Drive I, Scottsdale, AZ, 5.15%, 5/1/09, $3,696,361 par

Alliant University, Fresno, CA, 7.15%, 8/1/11, $2,781,611 par

Avalon Hills I, Omaha, NE, 6.93%, 3/1/10, $10,720,000 par

Biltmore Lakes Corporate Center, Phoenix, AZ, 6.00%, 9/1/09, $3,209,880 par

Carrier 360 I, Grand Prairie, TX, 5.40%, 7/1/09, $3,153,467 par

FIRST AMERICAN MORTGAGE FUNDS 2009 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

May 31, 2009

Citadel Apartments I, El Paso, TX, 6.53%, 4/1/10, $10,290,868 par

Country Villa Apartments, West Lafayette, IN, 6.90%, 9/1/13, $2,440,305 par

Courtyards at Mesquite I, Mesquite, TX, 6.53%, 11/1/09, $7,411,491 par

El Dorado Apartments I, Tucson, AZ, 7.15%, 9/1/12, $2,510,388 par

Fairview Business Park, Salem, OR, 7.33%, 8/1/11, $7,590,028 par

First Colony Marketplace, Sugar Land, TX, 6.43%, 9/1/10, $11,700,000 par

France Avenue Business Park II, Brooklyn Center, MN, 7.40%, 10/1/12, $4,293,704 par

Geneva Village Apartments I, West Jordan, UT, 7.00%, 1/1/14, $1,183,784 par

Jilly’s American Grill, Scottsdale, AZ, 4.37%, 9/1/09, $1,810,000 par

La Cholla Plaza I, Tucson, AZ, 3.67%, 8/1/09, $11,135,604 par

Meridian Pointe Apartments, Kalispell, MT, 8.73%, 4/1/12, $1,025,585 par

Noah's Ark Self Storage, San Antonio, TX, 6.48%, 9/1/10, $2,400,000 par

North Austin Business Center, Austin, TX, 5.65%, 11/1/11, $3,829,038 par

Outlets at Casa Grande I, Casa Grande, AZ, 6.93%, 3/1/11, $7,300,000 par

Outlets at Casa Grande II, Casa Grande, AZ, 6.90%, 3/1/11, $3,500,000 par

Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17, $4,600,000 par

Plantation Pines I, Tyler, TX, 6.59%, 2/1/10, $3,328,000 par

Shoppes at Jonathan's Landing, Jupiter, FL, 7.95%, 5/1/10, $2,685,528 par

Tatum Ranch Center, Phoenix, AZ, 6.53%, 9/1/11, $3,472,402 par

Villas of Woodgate, Lansing, MI, 6.40%, 2/1/12, $3,561,304 par

Vista Village Apartments I, El Paso, TX, 6.53%, 4/1/10, $6,094,592 par

Whispering Oaks I, Little Rock, AR, 5.93%, 2/1/12, $5,800,000 par

The fund has entered into a loan agreement with MMLIC under which MMLIC made a term loan to the fund of $54,400,000, which matures on July 31, 2011, and agreed to make revolving loans to the fund of up to $15,600,000. Loans made under the loan agreement are secured by whole loans in the fund’s portfolio and bear interest at the one-month LIBOR plus 2.625% with a “floor” interest rate of 5.00%. In addition, the fund pays an annual fee of 1.28% on any unused portion of the fund’s revolving loan commitment.

Interest Only - Represents securities that entitle holders to receive only interest payments on the mortgage. Principal balance on the loan is due at maturity. The interest rate disclosed represents the net coupon rate in effect as of May 31, 2009.

Variable Rate Security - The rate shown is the net coupon rate in effect as of May 31, 2009.

♣

Loan has matured and the fund is anticipating payoff or refinancing. Unless disclosed otherwise, the loan continues to make monthly payments.

Loan is currently in default with regards to scheduled interest and/or principal payments.

≠

Loan agreement was modified to allow borrower to pay no interest currently; however, interest will continue to accrue and will be payable at maturity.

♠

Participating Loan - A participating loan is one which contains provisions for the fund to participate in the income stream provided by the property, including net cash flows and capital proceeds. Monthly cash flow proceeds are only required to the extent excess cash flow is generated by the property as determined by the loan documents.

The participating loan is not currently making monthly cash flow payments.

■

Securities pledged as collateral for outstanding reverse repurchase agreements. On May 31, 2009, securities valued at $11,034,944 were pledged as collateral for the following outstanding reverse repurchase agreements:

Name of Broker

Acquisition

Accrued

and Description

Amount

Date

Rate*

Due

Interest

of Collateral

$10,436,837

5/20/09

0.50%

6/19/09

$ 1,739

(1)

* Interest rate as of May 31, 2009. Rate is based on the London Interbank Offered Rate (“LIBOR”) plus a spread and reset monthly.

Name of broker and description of collateral:

(1)

Goldman Sachs:

Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $2,095,912 par

Federal Home Loan Mortgage Corporation, 9.00%, 7/1/30, $173,478 par

Federal Home Loan Mortgage Corporation, 5.00%, 5/1/39, $5,678,760 par

Federal National Mortgage Association, 6.00%, 10/1/16, $181,326 par

Federal National Mortgage Association, 5.50%, 2/1/17, $319,909 par

Federal National Mortgage Association, 5.50%, 6/1/17, $204,980 par

Federal National Mortgage Association, 5.00%, 9/1/17, $357,372 par

Federal National Mortgage Association, 5.00%, 11/1/17, $740,496 par

FIRST AMERICAN MORTGAGE FUNDS 2009 Quarterly Report

Schedule of INVESTMENTS (unaudited)

American Strategic Income Portfolio III (CSP)

May 31, 2009

		Federal National Mortgage Association, 6.50%, 6/1/29, $618,895 par
		Federal National Mortgage Association, 7.50%, 5/1/30, $100,767 par
		Federal National Mortgage Association, 8.00%, 5/1/30, $40,847 par
		Federal National Mortgage Association, 8.00%, 6/1/30, $108,814 par
	The fund has entered into a lending commitment with Goldman Sachs. The monthly agreement permits the fund to enter into reverse repurchase agreements using U.S. government agency mortgage-backed securities as collateral.

Ø	Investment in affiliated security. This money market fund is advised by FAF Advisors, Inc., which also serves as advisor for the fund.

p	On May 31, 2009, the cost of investments for federal income tax purposes was approximately $328,103,778. The approximate aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:

	Gross unrealized appreciation		$	1,856,727
	Gross unrealized depreciation			(30,358,799	)
	Net unrealized depreciation		$	(28,502,072	)

Summary of Fair Value Exposure
The fund adopted Statement of Financial Accounting Standard No. 157, Fair Value Measurements ("FAS 157"), on September 1, 2008. FAS 157 requires the fund to classify its securities based on a valuation method, using the following three levels: Level 1 - Quoted prices in active markets for identical securities. Generally, the types of securities included within Level 1 of the fund are investments in preferred stocks and mutual funds with quoted prices. Level 2 - Other significant observable inputs (including quoted prices for similar securities, with similar interest rates, prepayment speeds, credit risk, etc.). Generally, the types of securities included in Level 2 of the fund are U.S. government agency mortgage-backed securities and commercial mortgage-backed securities. Level 3 - Significant unobservable inputs (including the fund's own assumptions in determining the fair value of investments). Generally, the types of securities included in Level 3 of the fund are whole loans, unregistered corporate notes issued by real-estate related companies, and private mortgage-backed securities. These securities have limited or no observable fair value inputs available, and as such, the fair value is determined through independent broker quotations or management's fair value procedures adopted by the board of directors. The valuation levels are not necessarily an indication of the risk associated with investing in these investments. Industry implementation has just begun and it may be some period of time before industry practices become more uniform. For this reason, care should be exercised in interpreting this information and/or using it for comparison with other mutual funds. As of May 31, 2009, the fund's investments were classified as follows:

	Investments in
	Securities
Level 1 - Quoted prices in active markets for identical assets	$	41,771,297
Level 2 - Other significant observable inputs		13,192,407
Level 3 - Significant unobservable inputs		244,638,002
Total	$	299,601,706

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:
	Investments in
	Securities
Balance as of August 31, 2008	$	274,791,933
Accrued discounts (premiums)		2,199
Realized gain (loss)		3,360
Net change in unrealized appreciation (depreciation)		(6,239,990	)
Net purchases (sales)		(23,919,500	)
Balance as of May 31, 2009	$	244,638,002

FIRST AMERICAN MORTGAGE FUNDS 2009 Quarterly Report

Item 2. Controls and Procedures.

(a)

The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)

There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 3. Exhibits.

Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act are filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

American Strategic Income Portfolio Inc. III

By: /s/Thomas S. Schreier, Jr.

Thomas S. Schreier, Jr.

President

Date: July 27, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/Thomas S. Schreier, Jr.

Thomas S. Schreier, Jr.

President

Date: July 27, 2009

By: /s/Charles D. Gariboldi, Jr.

Charles D. Gariboldi, Jr.

Treasurer

Date: July 27, 2009